Economic diversification and entrepreneurial revolution

THE Nigerian economy is overwhelmingly dependent on oil, while accounts for 81 percent of government revenue and more than 97 percent of export earnings. Myopic policies pursued by successive military regimes in the final decades of the last century devastated the traditional agrarian economy and crippled growth in the non-oil sectors.

Consequently, Nigeria’s growing oil wealth corresponded with a simultaneous decline of human development indicators and widening urban- rural divides. Massive imbalances in the economy spawned a thriving informal sector that continues to sustain most of Nigeria’s 188 million people( UN estimates October 19, 2016) . The fundamental problem with the Nigerian economy is its failure to diversify. Instead of investing oil revenues in multi-sector economic growth or poverty alleviation, past governments frittered away national profits through unsustainable import reliance, poorly sustained policies, and corruption. The resulting fragility has been clearly evident during the global economic downturn which has impacted key areas of the Nigerian economy from banking and foreign exchange reserves to the capital market and the mortgage sector.

Nigeria is better placed to develop a well-diversified economy than any other country in the West Africa. The abundance of natural resources, mineral deposits and fertile land it enjoys is unrivalled, as is its substantial human resource pool. A range of initiatives devoted to promoting other sectors of the economy is already in place as part of the government’s extensive reforms programme. The non–oil economy saw two- fold growth to 7 percent between 2001 and 2006, an encouraging sign in view of Nigeria’s vision 2020 goal of accelerated growth and economic consolidation. Optimising resource and raw material utilisation by developing a mass base of inter- linked enterprises are central to this scheme.

Economic transformation

Given past experiences and present realities, Nigeria’s resurgence is inseparably tied to business expansion in the small and medium sector. SMEs have proved reliable vehicles of economic transformation across the developing world because of the wide scope of their benefits – employment generation, foreign exchange conservation, optimal resource utilisation and equitable wealth distribution. The most convincing benefits of all, however, is the independence among businesses that SMEs foster- a critical consideration in the context of Nigeria’s long term ambition.

Recent efforts by government to promote a more inter- linked enterprise economy includes: Reinforcing the financial sector with the 2004 bank consolidation programme to improve credit access to the private sector, specifically, small businesses. Privatising major public sector entities in oil production and marketing, construction, mining and ports to promote private participation and downstream enterprise development. Reduction of government expenditure and involvement in direct economic production through commercialisation, disinvestment and strategic mergers.

The Nigerian economy has not diversified as hoped. Even after a decade of multifarious reforms, more than half of all industrial raw material and consumer goods continue to be imported. Non- oil export remains marginal while growth in potential boom sectors like tourism and textiles is sluggish. The dynamic economy running on rapid enterprise development that Nigeria is desperate for remains patently unachieved. The challenge of economic diversification is not limited to the developing world. Emerging and developed economies likewise are constantly seeking to reinvent and diversify their economic profile to reduce dependency on traditional sectors and take advantage of new opportunities in our globalised world. The oil rich emirate of Saudi Arabia, which is well on the way to rein venting itself as a luxury tourist destination, is a striking example.

Nigeria’s oil reserves are estimated to run out before the end of 2030. Even if further reserves are explored over the coming years, the eventual decline of oil- driven economy is inevitable.

Nigeria’s future standing on the world stage is therefore, a future beyond oil. If this future is to be a prosperous one it will be because Nigeria has successfully realised a multi-faceted and interdependent enterprise economy based on a profound entrepreneurial revolution.